1. Alberta Business Beat Volume 19 October, 2017
ATB Business & Agriculture

2. Background and Methodology
ATB Business & Agriculture

3. Background
ATB Financial commissioned NRG Research Group to conduct a survey of 300 randomly selected small- to medium-sized businesses in Alberta each quarter, beginning in Q Starting in Q1 2015, the Q1 waves of the Business Beat were conducted as part of the Alberta Business Survey, which increased the number of Q1 survey completes to 600.
The purpose of the study is to gain an understanding of the challenges faced by small- to medium-sized businesses in Alberta, and to track confidence in the business climate in Alberta.
ATB Business & Agriculture

4. Research Objectives
Measure business owners and managers’ perceptions of what the business climate will be like six months from now;
Understand how SMEs perceive working capital, external factors impacting its availability, how they are working to improve their situation, the role business debt plays and some of the advice they’ve received about how to manage working capital most effectively; and,
Profile the firmographics as well as respondent demographics for small- to medium-sized businesses in Alberta.
ATB Business & Agriculture

5. Methodology Alberta SMEs Qualifying Businesses <500 employees,
<$20 million annual revenues,
must be financial decision makers or influencers
Excluded agriculture, government, financial institutions, media, market research, PR, advertising and communications sectors
Field dates:
August 17 – 30, 2017
Telephone with online option
Approximately 14,000 businesses contacts made and 300 completed the survey
Margin of error is +/- 5.8%
ATB Business & Agriculture

6. Key Insights
Alberta SMEs’ optimism has leveled off following a spike in Q1 of However despite the lack of growth, SMEs remain optimistic overall, suggesting they are anticipating a slow, but steady, economic recovery. 1
More than one in ten SMEs report having a poor understanding of the concept of working capital and how it applies to their business. Of those who report a poor understanding, four in ten report having never sought out advice and expertise regarding their business’ working capital situation. 2
Over half of SMEs report carrying short-term debt. Of these, almost four in ten struggle to pay off short term debt when it is accrued. 3
ATB Business & Agriculture

7. The ATB Business Beat Indexes
ATB Business & Agriculture

8. SMEs remain optimistic about the future
“How do you think… will be six months from now?”
% better off
% the same
% worse
Alberta Economy
Your Company
69%
81% +3 -1
will be better off or the same
will be better off or the same
ATB Business & Agriculture
(±) Change from last quarter
Source: ATB Financial, Survey on Alberta SMEs, August 2017, n = 300.

9. The ATB Business Beat Index
More optimistic about future performance
Less optimistic about future performance
Data time periods: Q = Aug, 2014; Q = Dec 2014; Q = March 2015; Q = June 2015; Q = August 2015; Q = November, 2015; Q = March 2016; Q = June 2016; Q = September 2016; Q = November 2016; Q = January 2017 , Q = May 2017, Q = Aug 2017
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs

10. The ATB Business Beat Index - Energy
More optimistic about future performance
Less optimistic about future performance
Data time periods: Q = Aug, 2014; Q = Dec 2014; Q = March 2015; Q = June 2015; Q = August 2015; Q = November, 2015;
Q = March 2016; Q = June 2016; Q = September 2016; Q = November 2016; Q = January 2017, Q = May 2017, Q = Aug 2017
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs

11. The ATB Business Beat Index – Retail
More optimistic about future performance
Less optimistic about future performance
Data time periods: Q = Aug, 2014; Q = Dec 2014; Q = March 2015; Q = June 2015; Q = August 2015;Q = November, 2015;
Q = March 2016;Q = June 2016; Q = September 2016; Q = November 2016; Q = January 2017, Q = May 2017, Q = Aug 2017
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs

12. The ATB Business Beat Index - Construction
More optimistic about future performance
Less optimistic about future performance
Data time periods: Q = Aug, 2014; Q = Dec 2014; Q =March 2015; Q = June 2015; Q = August 2015, Q = November, 2015,
Q = March 2016, Q = June 2016, Q = September 2016, Q = November 2016, Q = January 2017, Q = May 2017, Q = Aug 2017
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs

13. Working Capital
ATB Business & Agriculture

14. “On a scale from 1 to 5, where 1 is “I don’t understand this term” and 5 is “I completely understand this term”, where would you rate your own comprehension of the term ‘working capital’?”
Question 2.1 My next set of questions is about what ‘working capital’ means in the context of your business. On a scale from 1 to 5, where 1 is “I don’t understand this term” and 5 is “I completely understand this term”, where would you rate your own comprehension of the term ‘working capital’?
5 (I completely understand this term) 4 3 2
1 (I don’t understand this term)
[DO NOT READ] I don’t know
[DO NOT READ] Prefer not to answer
[IF ASKED: For the purposes of this study, we are defining ‘working capital’ as the sum of assets (such as cash on hand, accounts receivable and inventory) minus the sum of liabilities (such as accounts payable and expenses). Working capital is the money available for a company to run its day to day operations.]
[READ AFTER ANSWERING EXCEPT WHERE DEFINITION ALREADY PROVIDED: Just so that we’re on the same page, because we’re talking to people of all backgrounds for this survey, we want to let you know how we are defining the term ‘working capital’. For the purposes of this survey, we are defining ‘working capital’ as the sum of assets (such as cash on hand, accounts receivable and inventory) minus the sum of liabilities (such as accounts payable and expenses). Working capital is the money available for a company to run its day to day operations.]
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, n = 300.

15. Among those who carry short-term debt; n = 158
“Which of the following most accurately reflects your business over the past year?”
n = 300
Among those who carry short-term debt; n = 158
Question 2.2 Which of the following statements most accurately reflects your business over the past year?
[IF NEEDED: Short-term debt consists of any debt incurred by a company that is due within one year. Short-term debt is usually made up of things like short-term bank loans, credit card debt, and cash advances]
We do not typically carry short term debt
We are typically able to pay off short term debt immediately
We sometimes struggle to pay off short term debt
We always struggle to pay off short term debt
[DO NOT READ] I don’t know
[DO NOT READ] Prefer not to answer
[Skip to Q2.8 if 1 or 2 in Q2.1]
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, n = 300, those who carry short-term debt, n = 158.

16. “If your company had excess working capital, would you…?”
(Multiple responses)
Those who responded “Other” (n = 40)
Those who are knowledgeable about working capital (n = 126)
Question 2.3 If your company had excess working capital, would you…?
[Rows]
Place it in short or long-term investments [IF NEEDED: For example: a business savings account, GIC, or other investment vehicle)
Pay down debt
Purchase inventory or equipment
Give out dividends or bonuses to shareholders or employees
Other (Please specify)
[DO NOT READ] I don’t know
[DO NOT READ] Prefer not to answer
[Columns]
Yes No
Not applicable
[DO NOT READ] Don’t know
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those knowledgeable about working capital, n = 126, Other, n=40.

17. “Has your business taken any steps to improve its working capital situation over the past year?”
Question 2.4 Has your business taken any steps to improve its working capital situation over the past year?
Yes No
[DO NOT READ] Don’t know
[DO NOT READ] Prefer not to answer
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those knowledgeable about working capital, n = 126.

18. situation over the past year?”
“Has your business taken any of the following steps to improve its working capital
situation over the past year?”
Question 2.4a Has your business taken any of these following steps to improve its working capital situation over the past year?
[Rows]
Reduced levels of inventory or equipment
Extended payment terms on your accounts payable
Implemented more favorable terms for your accounts receivable
Required a down payment on large orders
Used currency hedging
Sold off assets
Reduced staff
Postponed principal payments on debt
Refinanced debt for more favorable terms
Borrowed from personal savings
Sought new investors to provide a cash injection
Other (Please specify)
[DO NOT READ] I don’t know
[DO NOT READ] Prefer not to answer
[Columns]
Yes No
Not applicable
[DO NOT READ] Don’t know
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those that have taken steps to improve working capital, n = 70.

19. “Has your business taken any steps to improve its working capital situation over the past year?” (“Other”; multiple mentions)
“EXPANDED THE PRODUCT LINES. SELL ONLINE INTERNATIONAL, FIND A NEW MARKET.”
Owner/Operator, Professional, Scientific, & Technical Services, 2 years in business, 1 – 4 employees, Less than $500,000 annual revenue
“REDUCED MANAGEMENT WAGES, WE HAVE CUT ALL EXPENSES AS MUCH AS POSSIBLE.”
Owner/Operator, Retail,
30 years in business, 1 – 4 employees, $3 million to less than $5 million annual revenue.
Question 2.4a Has your business taken any of these following steps to improve its working capital situation over the past year?
[Rows]
Reduced levels of inventory or equipment
Extended payment terms on your accounts payable
Implemented more favorable terms for your accounts receivable
Required a down payment on large orders
Used currency hedging
Sold off assets
Reduced staff
Postponed principal payments on debt
Refinanced debt for more favorable terms
Borrowed from personal savings
Sought new investors to provide a cash injection
Other (Please specify)
[DO NOT READ] I don’t know
[DO NOT READ] Prefer not to answer
[Columns]
Yes No
Not applicable
[DO NOT READ] Don’t know
“WE HAVE MODIFIED WORK SCHEDULES, NOT NECESSARILY REDUCING STAFF. WE HAVE CHANGED PRICING PLANS FOR PRODUCTS AND SERVICES.”
Chief Financial Officer (CFO), Government services, 86 years in business, 20 – 49 employees, $1 million to less than $3 million annual revenue.
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those who responded Other, n = 35.

20. “Thinking of the past year, which one factor has had the biggest impact on your business’ working capital levels?” (Multiple responses)
“THE COMPANY IS DOING MORE RENTALS. NOW CUSTOMERS HAVE GONE FROM PURCHASING TO RENTING, WHICH TIES UP OUR CAPITAL.”
Owner/Operator, Construction, 8 years in business, 5 – 19 employees, $5 million to less than $10 million annual revenue
“…THE VENDORS HAVE TO WAIT LONGER FOR THEIR MONEY. WHAT USED TO BE 30 DAYS FOR US IS NOW 75 DAYS PLUS. THAT SEEMS TO BECOMING THE NEW STANDARD.”
Question 2.5 Thinking of the past year, which one factor has had the biggest impact on your business’ working capital levels?
[RECORD VERBATIM; PROBE FOR DETAIL]
[DO NOT READ] I don’t know
[DO NOT READ] Prefer not to answer
Director, 19 years in business, 20 – 49 employees, $10 million to less than $15 million annual revenue
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those knowledgeable about working capital, n = 126. Responses of 4% or higher shown

21. “Please let me know whether each of the following statements had a positive or negative impact on your business” (Positive sort)
Question 2.6 Please let me know whether each of the following statements apply to your business or not. [IF RESPONDENT SAYS YES, ASK: Has this factor had a positive impact, negative impact, or no impact on your business’ working capital situation over the past year.] [IF POSITIVE OR NEGATIVE: Is that very or somewhat <insert response>?]
[ROWS; RANDOMIZE]
Ability to pay your accounts payable
Collection of your accounts receivable
Clients’ ability to pay for products or services rendered
Your inventory levels
Seasonality of your business
Foreign exchange rates
The recent economic downturn
The growth of your business
Taxes or government regulations
[COLUMNS] Very positive Somewhat positive No impact Somewhat negative Very negative [DO NOT READ] Not Applicable
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those knowledgeable about business’ working capital, n = 126.

22. “Please let me know whether each of the following statements had a positive or negative impact on your business” (Negative sort)
Question 2.6 Please let me know whether each of the following statements apply to your business or not. [IF RESPONDENT SAYS YES, ASK: Has this factor had a positive impact, negative impact, or no impact on your business’ working capital situation over the past year.] [IF POSITIVE OR NEGATIVE: Is that very or somewhat <insert response>?]
[ROWS; RANDOMIZE]
Ability to pay your accounts payable
Collection of your accounts receivable
Clients’ ability to pay for products or services rendered
Your inventory levels
Seasonality of your business
Foreign exchange rates
The recent economic downturn
The growth of your business
Taxes or government regulations
[COLUMNS] Very positive Somewhat positive No impact Somewhat negative Very negative [DO NOT READ] Not Applicable
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those knowledgeable about business’ working capital, n = 126.

23. managing its working capital?”
“How often does your business seek out advice and expertise relating to
managing its working capital?”
(n = 300)
Understanding of working capital = 1 or 2 (Poor) n = 40
Question 2.8 How often does your business seek out advice and expertise relating to managing its working capital?
[IF NEEDED: this would include experts either internal and external to your business]
Daily
Weekly
Monthly
Quarterly
Yearly
Less often
Never
[DO NOT READ] I don’t know
[DO NOT READ] Prefer not to answer
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, n = 300, understanding of working capital is Poor, n = 40.

24. “Who does your business turn to for advice and expertise relating to
managing its working capital?”
Question 2.9 Who does your business turn to for advice and expertise relating to managing its working capital?
[RECORD VERBATIM AND CODE; DO NOT READ LIST EXCEPT TO CLARIFY]
Designated employee
Accountant or bookkeeper
Other business owners or business mentor
Family or friends
Financial advisor
Bank or banker
Lawyer
Online sources
Trade associations
Local government
Provincial government
Federal government
Other (specify)
Don’t know
Prefer not to answer
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those seeking advice or expertise on working capital, n = 189. Responses of 2% or higher shown

25. managing its working capital?”
“What is the most valuable piece of advice your business has received relating to
managing its working capital?”
“LIVING WITHIN OUR MEANS. THAT IS, DON'T SPEND MONEY THAT YOU DON'T HAVE COMING IN”
Director,
Audit Firm,
39 years in business,
100 – 199 employees,
Refused annual revenue.
“BASICALLY STAY ON TOP OF BILLING PRACTICES, INVOICING”
Owner/Operator,
Business Services,
19 years in business,
Less than $250,000 in revenues.
Question 2.10 What is the most valuable piece of advice your business has received relating to managing its working capital?
[RECORD VERBATIM]
[DO NOT READ] I don’t know
[DO NOT READ] Prefer not to answer
“CUTTING COSTS WHERE WE CAN AND NOT HOLDING A LOT OF DEBT”
Chief Executive Officer (CEO) or President,
Energy or Oil & Gas,
14 years in business,
employees,
$10 million to less than $15 million in revenues.
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, those seeking advice or expertise on working capital, n = 189. Responses of 3% or higher shown

26. APPENDIX: Firmographics & Respondent Demographics
ATB Business & Agriculture

27. Number of Employees Annual Revenues
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, n = 300.

28. Borrowing Needs # of Years in Operation
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 201, n = 300.

29. Industry Franchise Industry n = 31 Franchises 2017: 10% 8 5 3 2 1
Non-Franchise (n = 268)
Franchise Industry
n = 31
Food Services 8
Automotive 5
Retail
Energy/ Oil & Gas Services 3
Home Improvement Services 2
Travel, Leisure, & Accommodation
Non-profit
Advertising & Printing 1
Beauty & Fitness
Business Services
Financial Services/Insurance
Health
Other
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, n = 300. * Results of 3% of less are not shown.

30. Business Life Stage Phase
Entrepreneur
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, n = 300.

31. Title/ Role
Age
: 42%
ATB Business & Agriculture
Source: ATB Financial, Survey on Alberta SMEs, August 2017, n = 300. * Results of 2% or less are not shown.

32. Role in Financial Decisions
Gender
Source: ATB Financial, Survey on Alberta SMEs, May 2017 and December 2013, n = 300.

33. Judy Duncan
Managing Director Marketing
B&Ag Marketing
(403)
Cody Tousignant
Senior Research Manager
The Listening Post
(403)